JP Morgan Chase & Co today posted better than-expected third quarter profits, helped by lower loan losses in its retail and credit card units.
The bank's mortgage and credit losses have eased this year as the economy has improved. But its loan book is not growing, raising questions about where future profit growth will come from.
JPMorgan shares climbed slightly in premarket trading after the second-largest US bank by assets reported third-quarter net income of $4.4 billion, or $1.01 a share, up from $3.6 billion, or 82 cents a share, a year earlier. Analysts on average expected 90 cents a share return.
The bank wrote off fewer consumer loans as uncollectable in the quarter, helping it put aside less money to cover losses on such loans.
Investment banking profit fell by a third to $1.2 billion, which could be a bad sign for rivals Goldman Sachs Group and Morgan Stanley which report quarterly results next week.
JPMorgan's card services unit reported a profit of $735 million, compared with a year-earlier loss of $700 million. Its retail unit posted a profit of $907 million, up from just $7 million a year earlier.
Profit in its mortgage banking and other consumer lending business fell 50 per cent to $207 million, even as the bank set aside less money for loan losses in the unit.
Chief executive Jamie Dimon sounded cautious about the bank's outlook for its mortgage business, saying he expects mortgage losses to remain high for the next several quarters. "If economic conditions worsen, mortgage credit losses could trend higher," he said in a statement.
The mortgage business is also under pressure as some legislators push for the largest mortgage lenders to suspend foreclosures across the United States, following allegations that some banks used shoddy paperwork to kick struggling borrowers out of their homes.
Reuters